JLL reports strong success with large real estate investment transactions in 2017
Bangkok, 30 January 2018 - Bangkok's real estate market witnessed several large investment sales transactions in 2017. Of these, three of the largest were concluded by JLL on behalf of the owners with a combined value of THB 7.9 billion. The firm expects the momentum to continue in 2018 as rising real estate asset values have continued to motivate owners of prime properties to sell.
Suphin Mechuchep, Managing Director of JLL, says "In 2016 the largest real estate transactions JLL closed were two long leases of prime land plots in Bangkok. One was a 50-year lease of a site on Silom Road with approximately six rai of land. The lease was acquired by NYE Estate Co., Ltd. and Minor International PCL that formed a joint venture for a new Grade A office development on the site. The other transaction was a 30-year lease of a site of a similar size on Ploenchit Road, acquired by Raimon Land PCL. The two lease agreements account for over THB 15 billion of combined contract value and represent two of Bangkok's largest real estate investment deals recorded in 2016."
"Unlike 2016, all of the significant investment deals we closed in Bangkok in 2017 were sales of prime assets on a freehold basis," says Mrs.Suphin.
The three major real estate investment transactions include:
• former Australian Embassy site on Sathorn Road, with 7 rai 382 square wah of land, acquired by Supalai PCL,
• 224-key Premier Inn hotel in Bangkok acquired by Hotel 81 and branded as Travelodge Sukhumvit 11,
• and an unfinished 34-storey hotel development on Sukhumvit Road acquired by Carlton Hotel Group of Singapore.
Among the three deals, the sale of the former Australian Embassy site on Sathorn Road was the largest transaction recorded in Bangkok's Central Business District (CBD) in 2017.
Mrs. Suphin says "Owners of these assets disposed of their property for various reasons. For example, the Australian Embassy relocated to its new premises near Lumpini Park, and thus its former site on Sathorn Road was put up for sale. The Premier Inn hotel in Bangkok was a part of the Premier Inn portfolio in Thailand that UK-based Whitbread PLC decided to dispose of, following its plan to pull out of Asia and focus on Europe and the Middle East. Similarly, Principal Capital, the owner of the unfinished hotel development project on Sukhumvit Road, decided to sell the project due to a change in their business strategy after acquiring the property four years ago."
JLL expects real estate investment activity in Bangkok to remain robust in 2018, with a number of prime assets being for sale. In the start of the year, the firm has already closed the sales of two prime land plots in Bangkok's CBD, sized approximately 2 rai each, with a combined value of over THB 3.6 billion. The two plots are suitable for luxury condominium development. Bound to confidentiality agreements, JLL declines to disclose more details about the two transactions but expects the buyers to unveil their plan for the sites to the public soon.
"Whilst a concern over a new financial burden following the proposed new land and buildings tax has been expected to encourage more owners dispose of property, particularly that of high-value and is underutilized, evidence shows that sales of prime land in Bangkok have been motivated more by opportunities for owners to realise capital gains. The recent sales of the two prime land plots that JLL concluded on behalf of the sellers exemplify the case well. In addition, there are currently a few sizeable prime land plots and investment-grade hotels offered for sale in Bangkok with the owners motivated by high price offers from interested purchasers," says Mrs. Suphin.
"The proposed property and buildings tax should have an apparent impact on many property owners when there is more clarity about the new tax scheme and the rollout plan. However, we do not expect the new tax to lead to distress sales, particularly for prime real estate assets. Developers and investors will compete fiercely for sought-after assets when put up in the market," says Mrs. Suphin.
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Former Australian Embassy site on Sathorn Road
Unfinished hotel development project on Sukhumvit Road
JLL (NYSE: JLL) is a leading professional services firm that specialises in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 409 million square metres, and completed sales acquisitions and finance transactions of approximately $145 billion. At the end of the third quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of over 80,000. As of September 30, 2017, LaSalle Investment Management had $59.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
In Thailand, JLL started its operation in 1990 and today is the country's largest international property services firm with 1,600 employees and more than five million square metres of property and corporate facilities managed. In Euromoney Real Estate Survey 2017, JLL was voted as Thailand's number one overall real estate advisor for the seventh consecutive year and also won top votes for Research and Valuation for the third consecutive year.